Tungsten Outlook 2017: Price On The Rise

The tungsten market started off with low prices at the beginning of
2016, a theme that seemed consistent throughout most of the year.
Tungsten’s price has remained below $200 MTU, and it appears as though
it’s been that way through to December.

As of December, its prices have hovered between the $182-200 MTU
range, most likely as a result of a decrease in Chinese currency bumping
up local value. In that regard, 2016 was a bit of a tough year for the
tungsten market despite analysts being more hopeful about the year at
the end of 2015. While it was predicted the price would hover around the
$250 mark at the end of this year, that certainly hasn’t been the case.

It is noted that high stockpiles have put pressure on its price. In
November, concentrate stocks in China were “back to more traditional
levels,” and looks to potentially strengthen the price by making the
domestic market a priority.

On the mining side, 2016 proved to be a difficult year for
developers. In October, the company had to secure a debt restructuring
at its Hemerdon mine and, as a result, didn’t meet contract supply
obligations.

In China, the world’s largest tungsten producing country–production
was down 5.3 percent, year-on-year for the first ten months of 2016.
That said, the tungsten outlook for 2017 is looking to be a more
positive year for the market.

Tungsten outlook 2017

Looking ahead to 2017, a price on the rise and increase in demand
appears to be in the cards for the tungsten market, particularly in
China. Chinatungsten Online preducts tungsten concentrate prices in
China to sit between 75,000 and 80,000 yuan per ton in 2017–which is
higher than the 2016 average.

That said, Almonty Industries (TSXV:AII) announced in November that
it had entered into a number of one-year fixed prices for tungsten
concentrate for $210 MTU, which are effective as of January 1, 2017.

Lewis Black, president and CEO of Almonty Industries appeared hopeful
about the industry moving towards a fixed price. “We fully expect the
rest of the industry to move to a negotiated fixed price contract
environment due to the continued limited availability of tungsten
concentrate in the spot market and the ongoing illiquidity of the
current pricing mechanisms,” he said in the release.

While it seems as though a price recovery is in the works for the
tungsten market, it may take some time to come into play. The intrinsic
importance of tungsten to industrial applications will ensure that the
sector recovers, however; it is a question of not if, but when. That
said, investors will have to wait and see for themselves how the market
unfolds in 2017.